Hospitals see drop in patient volume and revenue

Hospitals slipped in their financial performance in July, as they saw a decline in volumes.

Health systems saw declines in both inpatient and outpatient revenue in July, according to the latest monthly report from Kaufman Hall. (Image credit: ©Amazing Studio - stock.adobe.com)

Health systems saw fewer patients across the board, according to the latest National Hospital Flash Report from Kaufman Hall, a healthcare consulting firm.

While hospitals have generally seen rising outpatient volume in recent months, there was a drop in September, possibly due to some patients deciding to hold off on elective procedures during the summer months. Health systems did see lower expenses in July, but the savings didn’t make up for the loss in revenue.

Hospitals are still in a better place than they were a year ago. But health systems will likely be facing financial difficulties for the foreseeable future, said Erik Swanson, senior vice president of data and analytics with Kaufman Hall.

“It’s clear that today’s challenging financial environment is here to stay, and hospital leaders must be proactive in seeking out opportunities to refine their operations and remain competitive,” Swanson said in a statement. “Collecting good data and feedback is essential for making timely, evidence-based process improvements.”

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The median year-to-date operating margin index for hospitals was 1.3% in July, down slightly from 1.4% in June, the firm said.

Outpatient revenue fell 8% from June to July, which actually represented a bigger decline than inpatient revenue. The report said inpatient revenue dropped 3% from June to July.

Fewer patients appear to be undergoing surgical procedures. Operating room minutes declined 13% in July, compared to June, but they were about the same as July 2022.

Adjusted discharges per calendar day fell 7% from June to July.

Health systems did spend less on labor in July. Labor expenses fell 1% from the previous month, and total expenses per calendar day dropped 4% from June to July. But they didn’t offset the revenue declines.

Hospitals are also seeing more of the impact of some states tightening eligibility on Medicaid enrollment. More than 30 states have removed some people from Medicaid lists who had previously been eligible, according to Kaufman Hall. Some hospitals have seen greater expenses in charity care as patients lose Medicaid coverage, the firm has said.

Some health systems have been boarding patients for longer periods, including some who are ready for discharge, due to a lack of beds or staff at nursing homes and other post-acute facilities. To alleviate the problem, hospitals must work with nursing homes and other facilities to improve the transfer of patients who no longer require acute care.

“Hospitals that prioritize care transitions are performing better than institutions who do not,” Swanson said in a statement. “Identifying steps that can ensure a smooth transition, such as obtaining prompt pre-authorizations and planning discharge early, will help organizations reduce expenses and improve patients’ experience.”

Many hospitals underperformed in June, and there’s a widening gap between hospitals with strong operating margins and those that are struggling, Kaufman Hall said.

Other analysts have said hospitals will continue to battle headwinds for a while. Fitch Ratings said last month that hospitals are showing some improvement, but they’ll likely see weaker margins for the rest of this year and into 2024.

The National Hospital Flash Report utilizes data from more than 1,300 hospitals from Syntellis Performance Solutions.

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